India’s largest lender in terms of market capitalization has conducted an investigation into allegations of “improper lending practices” and “conflict of interest” at its vehicle financing arm, Bloomberg has reported. Although details regarding the probe have not yet been made public, the tenure of Ashok Khanna, who worked at the bank for around 18 years and headed the crucial unit that accounted for around 10 percent of the lender’s loan book, was not extended despite an earlier proposal to do so.
The vehicle financing unit of HDFC Bank has total outstanding loans of Rs 1.2 lakh crore as of March 31, 2020, the news agency claimed. Earlier, the HDFC management was mulling over increasing Khanna’s tenure by at least six months until October. The decision was reportedly being considered to ensure smooth continuity ahead of the retirement of HDFC Bank Managing Director Aditya Puri.
However, 63-year-old Khanna retired from the bank as per the contract in March. Notably, Khanna, who was due to retire in 2017, had been receiving an extension, primarily due to the importance of his unit. The bank had probed all allegations leveled by an internal audit committee and it followed due process, the agency reported citing unnamed sources. Khanna also declined to comment on the probe, saying he retired as per the tenure of his contract.
Besides, HDFC Bank MD & CEO Aditya Puri, who is also the highest-paid banker in India, will retire in October. Puri left his cushy job at Citibank Malaysia to head back home and start a greenfield bank promoted by mortgage lender HDFC Ltd in the early 90s. Over the next two and a half decades, Puri scaled up the bank organically and turned it into a profit-making machine with the lowest NPAs in the industry.